According to a report on Vietnam’s Manufacturing Purchasing Managers’ Index (PMI) for January 2024 published by S&P Global, Vietnam’s manufacturing PMI has returned to above the 50-point threshold, specifically 50.3 points compared to 48.9 points the previous month.
It is worth noting that the industrial production index for January 2024 increased in 60 localities and decreased in 3 localities nationwide compared to the same period last year. Some localities saw a significant increase in their industrial production index due to the manufacturing and processing industry as well as the electricity production and distribution sector.
For example, in Thái Nguyên province, in the early days of 2024, the production atmosphere in many industrial enterprises in the province was bustling to produce the first orders of the year. With positive signals from the market, many businesses have secured new orders of large value. This helps to maintain the positive momentum of the province’s industrial production in January 2024, expecting a breakthrough in growth in the coming months.
Illustration – Has the “health” of Vietnam’s manufacturing sectors improved?
Compared to the same period, the industrial production index in January 2024 in the province is estimated to increase by 4.52% compared to the same period last year, in which the manufacturing and processing industry increased by 4.66%; electricity production and distribution increased by 3.94%; water supply, management, and waste treatment activities increased by 14.29%.
In some localities, the industrial production index in January 2024 increased significantly compared to the same period, with a major contribution from the manufacturing and processing industry. For example, Vĩnh Phúc increased by 31.99%; Bắc Giang increased by 57.63%, Phú Thọ increased by 38.8%…
Recent data from the General Statistics Office also recorded positive signals about the “health” of the manufacturing sector. The industrial production index in January 2024 is estimated to increase by 18.3% compared to the same period in 2023. In particular, the manufacturing and processing industry increased by 19.3% compared to the same period, contributing 15.1 percentage points to the overall increase.
One of the important factors contributing to the positive start of the manufacturing sector in the first month of 2024 is that production orders of enterprises have become more active. The textile industry is a typical example, as entering 2024, production orders for export of businesses in the industry have become easier, and some companies such as TNG Investment and Trade Joint Stock Company have secured new orders for the first 6 months of 2024.
This has helped the production index of the textile industry in January 2024 to be quite optimistic, with an increase of 46.2% in textiles and a 20.9% increase in garment production. Woven fabric products from natural fibers increased by 57%; regular clothing increased by 25.8%…
“January 2024 is the first time the manufacturing sector has recorded an increase in the total number of new orders since October 2023. This shows that the ‘health’ of Vietnam’s manufacturing industry has improved,” says the report from S&P Global.
In addition, the quantity of goods inventory after production decreased in January 2024. This decline is the largest since June last year.
However, the issue of delays in transportation contributing to prolonged delivery time of suppliers in January has led to a decline in the performance of sellers in more than a year.
Regarding the results of the report, Andrew Harker, Director of Economics at S&P Global Market Intelligence, said that this is an encouraging start for Vietnam’s manufacturing industry in 2024 with positive improvements in the number of new orders and output.
The start of the manufacturing sectors in the first month of 2024 is considered positive, but from a business perspective, it is uncertain. The reason is that Vietnam’s manufacturing sectors depend on exports, which means they depend on market fluctuations, while the global market situation is not yet stable. In particular, conflicts in the Red Sea region are seen as a potential disruptor of the supply chain, increasing costs for businesses.
Therefore, it is recommended that each business continue to invest in deep equipment, use automation, and digitize production lines to produce high-value goods, and focus on increasing labor productivity. Participate deeply and establish a position in the global supply chain.
In addition, proactively develop preventive plans to minimize risks and losses from trade incidents, international transportation, and related issues. Prepare quick response plans to minimize the impact time and limit the impact on the supply chain.
